• APAC stocks were mostly pressured after the recent upside in yields, while participants also digested mixed Chinese GDP and activity data.
• Chinese GDP YY (Q4) 5.2% vs. Exp. 5.3% (Prev. 4.9%), IP YY (Dec) 6.8% vs. Exp. 6.6% (Prev. 6.6%), Retail Sales YY (Dec) 7.4% vs. Exp. 8.0% (Prev. 10.1%).
• European equity futures are indicative of a lower open with Euro Stoxx 50 future -0.9% after the cash market closed down 0.2% on Tuesday.
• DXY hovers above the 103.50 mark, JPY remains heavily pressured, Cable lingers around the 1.26 mark ahead of inflation metrics.
• Looking ahead, highlights include UK CPI, EZ HICP (Final), US Import Prices, Retail Sales, Industrial Production, Japanese Machinery Orders, Fed Beige Book, comments from ECB’s Knot & Lagarde, Fed’s Williams, Barr & Bowman, Supply from Germany, UK & US, Earnings from Pearson, US Bancorp & Citizen Financial Group.

US TRADE

EQUITIES

• US stocks were subdued with tech the only sector in the black as risk appetite was sapped by rising yields and ongoing geopolitical risks, while comments from Fed's Waller tapered expectations for a deep cutting cycle in which he noted that rate cuts could occur in 2024 but lacked explicitness on timing and stated there was "no reason" to cut as quickly as in the past. As such, treasury yields were lifted and Fed rate expectations rose, which supported the buck despite the abysmal New York Fed Manufacturing survey.
• SPX -0.37% at 4,765, NDX -0.01% at 16,830, DJIA -0.62% at 37,361, RUT -1.21% at 1,927.
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NOTABLE HEADLINES

• US Senate voted 68-13 to advance the stopgap funding bill through the first procedural hurdle in an effort to avert a shutdown.

APAC TRADE

EQUITIES

• APAC stocks were mostly pressured after the recent upside in yields and tapering of Fed rate cut expectations, while participants also digested mixed Chinese economic releases including GDP and activity data.
• ASX 200 declined as losses in the commodity-related sectors overshadowed the gains in defensives and tech.
• Nikkei 225 was initially boosted at the open on the back of a weaker currency and briefly climbed back above 36,000 but then pulled back from fresh three-decade highs and wiped out all of its gains as it succumbed to the risk-off mood.
• Hang Seng and Shanghai Comp retreated amid the mixed data releases from China and with Hong Kong significantly underperforming amid hefty losses in tech and property, with the latter pressured by the decline in Chinese home prices.
• US equity futures (ES -0.3%) were subdued after the uninspired performance during US trade and weakness in Asia.
• European equity futures are indicative of a lower open with Euro Stoxx 50 future -0.9% after the cash market closed down 0.2% on Tuesday.

FX

• DXY traded steadily and held on to the prior day's gains above 103.00 after surging on the back of the risk aversion, higher yields and hawkishly perceived comments from Fed's Waller.
• EUR/USD suffered from the recent dollar strength and slipped beneath the 1.0900 level yesterday despite the plethora of comments from ECB officials that continued to suggest it is too soon to cut rates.
• GBP/USD was subdued amid the downbeat mood and after the softening of wages data, while UK CPI looms.
• USD/JPY marginally extended further above 147.00 owing to the firmer buck and widening yield differentials.
• Antipodeans were ultimately softer with price action largely influenced by the risk environment.
• PBoC set USD/CNY mid-point at 7.1168 vs exp. 7.1986 (prev. 7.1134).

FIXED INCOME

• 10yr UST futures bounced off the prior day's lows but remained beneath 112.00 after comments from Fed's Waller tapered aggressive Fed cut expectations, while focus turns to a busy global data calendar and supply including the US 20yr auction.
• Bund futures sat near a monthly low ahead of a 30yr auction and after ECB's pushback against imminent cuts.
• 10yr JGB futures tracked the recent losses in global peers with prices not helped by the absence of BoJ buying.

COMMODITIES

• Crude futures were subdued after the prior day's choppy performance as a firmer dollar and broad risk-averse conditions outweighed escalating geopolitical tensions, while refinery disruptions in Texas due to extreme weather had little effect.
• EIA reported US total shale regions' oil production for February is seen down about 900 BPD at 9.68mln BPD (vs 600 BPD fall in January).
• Spot gold retested the prior day's lows after slipping beneath its 100DMA (USD 2,035) due to a firmer dollar.
• Copper futures were subdued by the downbeat mood and mixed data from the world's largest copper buyer.
• First Quantum (FM CA) offered voluntary retirement to more than 1500 employees of the Cobre Panama mine.

CRYPTO

• Bitcoin was on the back foot and retreated beneath the USD 43,000 level amid the broad risk aversion.
• A new rule requiring US businesses to report cryptocurrency transactions over USD 10k has been postponed until the IRS issues new regulations on digital asset reporting, according to Cointelegraph.

NOTABLE ASIA-PAC HEADLINES

• China's stats bureau head said the economy faces a complex external environment and insufficient demand in 2024, as well as noted that low consumer prices reflect insufficient effective demand and expects a modest consumer price rise in 2024. NBS head stated China's economy is at a crucial stage of recovery and its property market is showing some positive changes, while he added there is still relatively big room for China's property sector to develop and there is still room to unveil more policy steps to support growth.

DATA RECAP

• Chinese GDP QQ SA (Q4) 1.0% vs. Exp. 1.0% (Prev. 1.3%, Rev. 1.5%)
• Chinese GDP YY (Q4) 5.2% vs. Exp. 5.3% (Prev. 4.9%)
• Chinese Industrial Production YY (Dec) 6.8% vs. Exp. 6.6% (Prev. 6.6%)
• Chinese Retail Sales YY (Dec) 7.4% vs. Exp. 8.0% (Prev. 10.1%)
• Chinese China House Prices YY (Dec) -0.4% (Prev. -0.2%)

GEOPOLITICS

MIDDLE EAST

• US Central Command said the US conducted strikes in Yemen as Houthi attacks against international shipping continue and that US forces destroyed four Houthi anti-ship ballistic missiles.
• US President Biden's administration is expected to announce plans to designate Yemen's Houthi rebel group as a global terrorist organisation, according to an official cited by CBS News.
• US National Security Council spokesperson said the US welcomed the announcement by Qatar that an agreement was reached to have medicine delivered to hostages in Gaza, according to Reuters.
• Iran launched a missile attack on Baluchi militant group Jaish al Adl bases in Pakistan. It was later reported that Pakistan's Foreign Ministry said Pakistan strongly condemns the unprovoked violation of its airspace by Iran and a strong protest has been lodged with Iran.

OTHER

• China's Taiwan Affairs Office said Taiwan's election result cannot stop the trend towards reunification and China is willing to create the widest space for peaceful reunification, while it added that Taiwan has never been a country and China will never leave any space for Taiwan independence, according to Reuters.

UK/EU

NOTABLE HEADLINES

• ECB's Muller said market expectations for 2024 ECB rate cuts are "aggressive" and Euro area wage growth is not in line with the inflation target.
• ECB's Simkus said he is far less optimistic than markets on rate cuts and that cuts may begin around the summer, while he noted that wage data is going to be very important, according to a Bloomberg interview.
• French President Macron said he will ask the government to launch a new package of liberal market reforms to boost the economy and said France will be stronger if it becomes financially independent again.